The Perils of a Pay-on-Death Account Don’t Make This Mistake!
Has someone encouraged you to create a pay-on-death bank account? You should urgently rethink that advice. Craig Hersch explains the problems such a designation can cause in this abridged blog post. Read his full thoughts at FloridaEstatePlanning.com/pay-on-death-fail. Not to disparage bank employees, but tellers, managers, and other
accounts. Absent such a document, the account funds may not be accessed. The family’s choice would be to head to guardianship court, which takes time and is expensive. Further, the financial institution’s responsibility is to pay the account to the beneficiaries upon demand at the account owner’s death. If the account owner has a surviving spouse who would have rights to the account, that controversy could end up in litigation. So could others. In one case, a client named her son as a POD beneficiary. At the time of the client’s death, the son was undergoing a divorce. The account sums ended up included in alimony calculations. The frustrating aspect of this case was that the client had a revocable trust explicitly drafted to protect the son’s inheritance from a divorcing spouse. All of these problems may be alleviated through a revocable trust. You remain in control when you create a revocable trust and transfer your assets. When you become incapacitated, the person or institution you’ve named to serve as your
bankers have told many of my clients to designate their accounts as “Pay-on-Death” to their beneficiaries rather than spending the money to create a revocable living trust. While a Pay-on-Death (POD) account will generally avoid the probate process, those accounts are not ideal. PODs may name a single or multiple parties, but a beneficiary differs from an account signatory. Generally speaking, if the account owner becomes incapacitated, the POD beneficiaries cannot access the account funds for the account owner’s benefit. Hopefully, the account owner has a validly drawn, current durable power of attorney to enable the agent named in that document to handle POD
successor trustee steps in seamlessly to handle your financial affairs. Upon your death, the assets in the trust avoid the probate process.
Ta s t
TAKE A BREAK!
Just like Grandma made!
INGREDIENTS
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2 9-inch unbaked pie crusts
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3/4 cup granulated sugar 2 tbsp all-purpose flour
6 cups thinly sliced peeled apples
1 tsp cinnamon
2 tbsp butter
DIRECTIONS 1. Preheat oven to 425 F. 2. Place 1 pie crust in a 9-inch pie plate.
3. In a large bowl, combine apples, cinnamon, sugar, and flour. 4. Spoon mixture into pastry-lined pie plate and dot with butter. 5. Cut remaining crust into 1/2-inch-wide strips, then arrange strips in a lattice design over top of pie. 6. Trim, seal, and flute edges. 7. Bake for 35 minutes or until crust is golden brown and filling is bubbly.
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